In the present COVID 19 situation many economists have raised their concerns that Indian e...........

Economics (CUET) Money and banking

In the present COVID-19 situation, many economists have raised their concerns that Indian economy may have to face a deflationary situation due to reduced economic activities in the country. Suppose you are a member of the high-powered committee constituted by the Reserve Bank of India (RBI). You have suggested that as the supervisor of commercial banks, ................. (restriction/release) of the money supply be ensured by the Reserve Bank of India (RBI).

Restriction

Release

Either (1) or (2)

Neither (1) nor (2)

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Explanation:

Option (2) is correct.
Explanation: RBI should release money as it will increase money supply in the economy, and thus in turn will increase production activities.